What to do if you win the lottery
IDAHO FALLS, Idaho (KIFI) - It's something most people have dreamed about since they were kids. Winning the lottery.
Since nobody won Saturday night's Powerball drawing, the jackpot is now up to 800 million dollars. If no winner is drawn today, then it will likely surpass the billion-dollar mark, which the Mega Millions drawing is already at.
But if by some miracle you do have the winning ticket, one question remains. What do you do if you win?
Certified personal accountant, Joseph Mahoney, making the right financial steps could be the difference of long-term financial stability, or potentially losing it within a year.
One of the first things he advises a lottery winner is to assemble a team to help manage the money.
“Get an attorney,” Mahoney said. “Get a financial advisor who can handle that kind of funds and a CPA to help you with the influx of cash and funds coming in and how to handle it correctly.”
Assembling a team is just only one action on a laundry list of things to do. Mahoney also says lottery winners should make multiple copies of their winning ticket and put the real one in a safe or bank deposit box.
It’s also advised to keep the information as private as possible and not to share the news on social media.
“You may even consider moving,” Mahoney said. “The last thing you want is for someone to follow you or one of your family members home.”
After winning the lottery, you have to make one of the biggest decisions of your life. Do you take the lump sum or the annuity?
The lump sum allows you to collect all of your money at one time. Which is a pretty attractive deal. But Mahoney says taking the lump sum can create some serious money problems.
"A lot of people take that money and that's when they go bankrupt because they think that money is going to last forever," Mahoney said. "They don't invest correctly, they don't have a good advisor or an attorney or CPA to invest in it properly."
The other option is the annuity, which is a series of steady payments on monthly quarterly, or annual schedules.
“The pro of the annuity option is you get it every year,” Mahoney said. “You’re only taxed for the portion you get it that year and for the next 30 years, you have a string of income coming in."
But if you do take the lump sum, there is a clever way to help your family and friends without losing money to taxes.
According to Turbo Tax, you can give up to 16 thousand dollars to anyone you want, without those gifts counting against your $12.06 million lifetime exemption. But it’s still advised to fill out a gift tax form even if you don’t owe anything.
The next Powerball drawing is tonight at 9 p.m. MST
The next Mega Millions drawing is tomorrow at 9 p.m. MST
